The Best Way to Keep Founders Around After an Acquisition

Posted by Boris Wertz

Facebook, Google, Salesforce, Twitter—all the top players in Silicon Valley want to get their hands on the best talent around.

That’s why we’ve seen example after example of “acqui-hires” in the past few years as well as some very large acquisitions where a big driver was the talent behind a start-up (e.g. Nest, Beats).

However, only a few big companies have truly figured out how to keep founders around after the acquisition. In most cases, as Bloomberg detailed with Zynga, the founder leaves one or two years after acquisition.

Someone founds a company because they want to be a leader, not a follower. Entrepreneurs have a difficult time when the acquiring company tries telling them how to run the business they have created and grown.

When the acquiring company is successful at getting the founder to stick around, it’s typically because they’ve learned to give their founders the latitude to run their startup as an independent unit within the business. You’ll hear these founders say, “I work for Marc [Benioff]” or “I work for Jeff [Bezos]” rather than “I work for Salesforce” or “I work for Amazon.”

In this case the startup founders get direct access to the CEOs. Nothing changes for the startup except who owns the company.

It is no surprise that the companies that best understand how founders tick are the ones that have still their founders at the helm: Google, Facebook, Salesforce, Amazon, etc. The companies that have figured out how to keep founders around can leverage their knowledge and expertise over time—and thus pay much higher acquisition prices than those companies that fear that acquired founders will leave as soon as they can, because they hate to get bogged down in bureaucracy and a big corporation.

This article first appeared on Version One Ventures.

Company:
Google
Website:
http://www.google.com
Location:
Waterloo, Ontario, Canada

Google's mission is to organize the world's information and make it universally accessible and useful. As a first step to fulfilling that mission, Google's founders Larry Page and Sergey Brin developed a new approach to online search that took root in a Stanford University dorm room and quickly spread to information seekers around the globe. Google is now widely recognized as the world's largest search engine --... more

Company:
Twitter
Website:
http://www.twitter.com
Location:
San Francisco, California, United States

Twitter is a privately funded startup with offices in the SoMA neighborhood of San Francisco, CA. Started as a side project in March of 2006, Twitter has grown into a real-time short messaging service that works over multiple networks and devices. In countries all around the world, people follow the sources most relevant to them and access information via Twitter as it happens—from breaking world news to updates... more

Company:
Salesforce.com
Website:
http://www.salesforce.com
Location:
Toronto, Ontario, Canada

Salesforce.com is the enterprise cloud computing company that is leading the shift to the Social Enterprise. Our trusted cloud platform and apps—including our flagship CRM solution—help employees collaborate easily and connect with customers like never before. And thanks to the cloud, all of it comes with low cost, low risk, and fast results. Our 100,000+ successful customers tell the story best. more


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Boris Wertz

Boris Wertz

Boris Wertz is one of the top tech early-stage investors in North-America and the founding partner of version one ventures. His portfolio encompasses over 40 early-stage consumer internet and enterprise companies, including Edmodo, Flurry, Frank & Oak, Indiegogo, Julep, Top Hat, and Wattpad. He sits on the boards ofClio and Indochino among others. Boris is a venture partner of Munich-based... more




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